Beginning September 1, 2009, the long-awaited Act on the Promotion of Renewable Sources of Energy and High-Efficiency Cogeneration (the Act) will go into effect. The Act revises the rules supporting electricity produced from renewable energy sources and introduces new rules supporting high-efficiency cogeneration of electricity. The Act also introduces new rules on biomethane production.
Renewable Energy Sources and High-Efficiency Cogeneration – The Act applies to the following renewable energy sources: hydropower, solar, wind, geothermal, biomass (including all products derived from biomass processing), biogases, sewage treatment plant gas and biomethane.
The Act defines high-efficiency cogeneration as simultaneous generation in one technological process of (i) electricity and thermal energy; (ii) mechanical energy and thermal energy; or (iii) mechanical energy, thermal energy and electricity in (a) an installation with an installed capacity below 50 kW; (b) an installation with an installed capacity below 1 MW that provides primary energy savings when compared to the separate production of heat and electricity; or (c) an installation with an installed capacity exceeding 1 MW that provides primary energy savings of at least 10 percent.
Feed-In Tariff Scheme – The Act provides for a feed-in tariff scheme to promote the production of electricity from renewable energy sources and high-efficiency cogeneration (RHEC Electricity).
Premium – The feed-in scheme is based on a premium payment on top of the basic electricity price set by the Office for Regulation of Network Industries (the Office) for a certain type of renewable energy. The premium payment is equal to the difference between the basic price and the price of electricity set by the Office for the electricity to cover losses in the distribution grid. The Office sets the basic price mainly depending on the date of initial operation, reconstruction or modernization of a power generating installation, its installed capacity and its used technology.
A producer of RHEC Electricity is entitled to a premium on the basic electricity price for 15 years after the initial operation, reconstruction or modernization of a power generating installation. The basic price of electricity used for the calculation of the premium will be the same for the entire period during which the electricity producer is entitled to the premium. Nevertheless, the Office may increase this price by a coefficient of nuclear inflation and a coefficient reflecting the technology used.
Further Support – The Act also provides for other support, such as (i) the right of RHEC Electricity producers to priority connection, access, transmission, distribution and supply of electricity, (ii) an offtake of RHEC Electricity by operators of regional distribution grids to cover the distribution grid’s losses and (iii) obligatory assumption of liability by an operator of a regional electricity distribution grid for a deficiency of RHEC Electricity producers.
Scope of Support – The scope of the above support is different for individual RHEC Electricity producers. The scope may be summarized as follows:
Premium – An electricity producer has the right to a premium on RHEC Electricity in an installation with a total installed capacity up to 10 MW. If the source exceeds this installed capacity, the right to the premium applies to a proportional part of produced electricity calculated as a ratio of 10 MW to the total installed capacity.
In the case of wind energy sources, the support applies to the entire electricity generation in an installation with a total installed capacity up to 15 MW. The support applies to the entire electricity generation in installations with high-efficiency cogeneration exceeding a total installed capacity of 10 MW, if a share of heat for technological purposes does not exceed 40 percent of useful heat. The support also applies to (i) all RHEC Electricity generation in installations with a total installed capacity of more than 10 MW, if a share of heat for technological purposes does not exceed 40 percent of useful heat and a share of renewable energy sources in fuel exceeds 20 percent and (ii) all RHEC Electricity from cogeneration by (co)burning biomass meeting certain criteria.
Priority – The priority right pertains to each RHEC Electricity producer and is not subject to any time limit.
Electricity Offtake to Cover Losses – Support in the form of the electricity offtake to cover losses in the distribution grid pertains to all producers with installations having a total installed capacity up to 125 MW. It also covers producers with installations having a total installed capacity up to 200 MW if an energy share of renewable energy sources in fuel exceeds 20 percent. Support is provided for 15 years, except for the producers in installations with a total installed capacity up to 1 MW, which are entitled to such support during the entire lifetime of an installation.
Assumption of Liability for a Variance – The right to assume liability for a variance applies to installations with a total installed capacity below 4 MW. Such right is applicable for 15 years, unless an installation has a total installed capacity up to 1 MW, in which case such right lasts for the lifetime of the installation.
Certificate – Upon request of a producer generating RHEC Electricity, the Office will issue to such producer a certificate of origin for the following (and in case of renewable energy sources, also for the preceding) calendar year. The Act also stipulates that certificates of electricity origin issued in other EU countries, save for certain exceptions, apply as Slovak Republic certificates of origin.
Implementing Regulations – The Act empowers the Ministry of Economy of the Slovak Republic and the Office to issue necessary implementing regulations. Such implementing regulations, or at least some of them, are expected to be issued by the end of 2009.
Biomethane – The Act also provides for the right of biomethane producers to a priority connection and access to the natural gas distribution grid and its priority distribution.
For further information on the Slovak Republic’s renewable energy legislation, please contact your principal Squire Sanders lawyer or one of the individuals listed in this Alert.